Tax optimiser: Perks, medical cover can help salaried Shah save about Rs 13,000 in tax
Pune-based Hiten Shah’s salary structure is already quite tax friendly and he has invested in all tax saving instruments so there is little scope to reduce the tax. Even so, Taxspanner estimates that Shah can reduce his tax by about Rs 13,000 if he gets a few tax-free perks and buys medical insurance.
Shah already gets tax-free perks but he should ask his company for a few others, such as reimbursements for telephone and newspaper bills. These perks are tax free against submission of bills. If he gets Rs 2,000 a month for telephone and Internet and Rs 1,000 for books and periodicals, his tax will reduce by about Rs 7,500.
Shah gets the NPS benefit from his company. Under Sec 80CCD(2), 10% of his basic salary is put in NPS every month. He also invests Rs 50,000 in the NPS under Sec 80CCD(1b) on his own. At 39, Shah should opt for a balanced allocation which divides the corpus across corporate debt funds, gilt funds and equity funds.
One way Shah can save tax is by buying a health insurance plan. Right now, he is relying on the group health cover provided by his employer. Group health covers are useful but end when a person changes jobs or retires. Shah should buy a separate health insurance for his family. A premium of Rs 20,000 will cut his tax by about Rs 4,000.
More tax can be saved if he switches from fixed deposits to debt funds. Interest from FDs is fully taxable as income while the gains from debt funds are taxed only at the time of redemption. The tax rate is lower if held for more than three years.
Income from employer
Income from other sources
Hiten Shah’s tax
(As published on Economictimes Indiatimes,March 26, 2019)